City pulling a fast one with street-repair tax

City hall is planning to add $115 million in funding to rehabilitate Winnipeg's crumbling roads over the next three years through its new "street renewal reserves." Mayor Sam Katz says the new spending will be funded by 1% annual property tax hikes for each of the two reserves. He insists that without the tax increases, the city would be unable to increase funding for road repair.

But according to the city's 2014 budget numbers, less than half the $115 million in new road repair money will come from annual property tax increases.

Only $50 million of the $115 million will be raised through the 2% property tax hikes. The rest will either be borrowed -- which taxpayers will have to repay one day -- or is being funded by taxes we already pay.

For example, the city created a new Regional Street Renewal Reserve fund that will raise $35.3 million this year to repair regional roads, sidewalks, curbs and downtown streets.

Katz and Coun. Russ Wyatt, the city's finance chair, were promoting the fund this week, saying it will be used to rehabilitate streets like Henderson Highway.

"A one percent property tax increase will fund the new reserve, which will be 100 percent dedicated to regional streets," a city news release claimed Monday.

That's not exactly true.

Of the $35.3 million, $16.5 million is the base budget from what the city spent on regional streets last year. Of the new $18.8 million in regional road funding, $10 million is being borrowed and another $4.5 million comes from existing taxation revenues. That leaves only $4.3 million in new funding from the 1% tax hike.

The 1% tax increase for the fund will raise $4.7 million, but $400,000 of it will be eaten up in interest charges.

Which means most of the money this year in the regional street reserve doesn't come from a tax increase at all.

Over the next three years, the cumulative increase in regional road repair is projected to be $65.4 million. Of that, $25 million will be borrowed money, $14.2 million will be from existing tax revenues and only $26.2 million will be from the 1% tax increase.

It's really a shell game.

The problem with Katz's so-called solution to fixing the city's crumbling roads is that it's really no solution at all. The city plans to borrow $50 million in total to kick start both funds. But once the reserve funds are set up, funding for road repair from one year to the next won't increase much.

In fact, funding for the local street reserve is projected to go down slightly in 2015 to $39.2 million from $39.9 million in 2014.

And it's projected to stay at $39.2 million in 2016, even though taxes will be going up every year by at least 2% for the next nine years.

There's something wrong with this picture.

Katz says taxpayers have made it clear that fixing city roads should be the top priority for city hall. He's right. But his plan won't even come close to fixing the city's crumbling roads.

According to the city's own figures, city spending on regional roads should be at $60 million a year right now in today's dollars over the next 25 years to keep our streets in decent repair.

Under Katz's plan, the city won't reach an annual budget of $60 million for regional road repair until 2021. Which means by 2035, there will be a deficit of $400 million in regional road spending, according to city projections.

Despite that, Katz and city council have squandered tens of millions on inflated bureaucratic costs, massive cost over-runs on building projects and runaway labour costs at city hall.

Not even 2% annual property tax hikes will be enough to clean up the mess Katz is leaving behind.

Where the money comes from:

Total Regional Street Renewal spending:

2013: $16.5 M

2014: $35.3 M

2015: $39.7 M

2016: $39.9 M

Cumulative increase in regional street renewal over three years: $65.4 million

Where did the $65.4 million come from?

$25 million borrowed

$14.2 million from existing revenues

$26.2 million from 1% annual tax increase

Total Local Street Renewal spending

2012: $21.7 M

2013: $35.7 M

2014: $39.9 M

2015: $39.2 M

Cumulative increase in local street funding over three years: $49.8 million

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City pulling a fast one with street-repair tax

City hall is planning to add $115 million in funding to rehabilitate Winnipeg's crumbling roads over the next three years through its new "street renewal reserves." Mayor Sam Katz says the new spending will be funded by 1% annual property tax hikes for each of the two reserves. He insists that without the tax increases, the city would be unable to increase funding for road repair.

But according to the city's 2014 budget numbers, less than half the $115 million in new road repair money will come from annual property tax increases.

Only $50 million of the $115 million will be raised through the 2% property tax hikes. The rest will either be borrowed -- which taxpayers will have to repay one day -- or is being funded by taxes we already pay.

For example, the city created a new Regional Street Renewal Reserve fund that will raise $35.3 million this year to repair regional roads, sidewalks, curbs and downtown streets.

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